Lehman Bankruptcy Tab: $1.4 Billion, and Counting

Lehman Brothers Holdings Inc.’s lawyers, consultants and financial advisers received $36.6 million in fees during October, bringing their total cost since the investment bank’s September 2008 bankruptcy filing to more than $1.4 billion.

In a Tuesday filing with U.S. Bankruptcy Court in Manhattan, Lehman said it paid professionals from its lead bankruptcy law firm–Weil, Gotshal & Manges–more than $15 million in October, though more than half of that number comes from prior month holdbacks. Weil professionals have been paid more than $350 million, in what is the biggest–and most expensive–Chapter 11 case in history.

Alvarez & Marsal, the restructuring firm unwinding Lehman, received $9.3 million during October, and is approaching $500 million since the beginning of the case.

Bryan Marsal, one of the firm’s founders, is serving as Lehman’s chief executive. The firm is also running Lamco, the asset-management unit Lehman recently spun out of its bankruptcy case.

Lehman disclosed the fees in its routine monthly operating report. The law firm representing Lehman’s unsecured creditors committee, Milbank, Tweed, Hadley & McCloy, billed Lehman for $2.9 million during October, and is up to nearly $120 million since the beginning of the case.

Bankruptcy law requires an estate to pay the fees and expenses working on behalf of official committees.

Lehman in 2008 filed for the largest bankruptcy in history, with 23 entities included. After more than three years under the direction of Alvarez & Marsal, the firm is poised for a pivotal moment early next month, when it presents its latest creditor-payback plan to a judge.

The proposal, Lehman’s third, was filed in June and could pay creditors up to $65 billion. It gives those owed money from Lehman’s various subsidiaries larger recoveries than they would have received under its original plan, but defines how much they can claim. The plan has much wider support than a prior one, including from two groups that had filed competing proposals. Judge James Peck sent the plan to creditors for a vote this past summer, and has set a Dec. 6 hearing to consider whether to confirm it.

Lehman’s most recent estimates say it would likely have $322 billion in allowed claims against the estate, with $272 billion from the parent company and about $50 billion from its various subsidiaries.

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